New York State Comptroller Thomas DiNapoli said Tuesday that Wall Street bonuses jumped 17% last year, to an estimated $20.3 billion, as profits in the financial services sector rebounded.
The average taxable bonus for securities industry employees in New York rose to $123,850 in 2009 from $112,000 the year before, according to estimates from the comptroller.
At Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), and JPMorgan Chase (JPM, Fortune 500) overall compensation increased by 31% in 2009. Average compensation rose by 27% to more than $340,000.
The rebound in bonus payments comes amid a sharp increase in Wall Street profits, which could reach an “unprecedented” $55 billion for 2009, DiNapoli said.
That would be nearly three times greater than the previous all-time record annual profit, but follows a $42.6 billion loss in 2008.
The bulk of the increase in profits came from broker-dealer operations, which brought in a record $49.9 billion through the first three quarters of 2009.
Despite the increase in compensation and profits, bonus payments remain below record levels of just a few years ago. In 2007, for example, bonuses totaled nearly $33 billion.
“It’s still not back to historic levels,” DiNapoli told reporters at a press conference in New York. “It’s down by about 30% compared to the numbers in the bonus pool prior to the downturn and the great recession.”
DiNapoli said the financial services industry is “vital” to New York’s economy, but he acknowledged the massive bonuses are a “bitter pill” for most Americans.
“There’s a lot of resentment against the industry over its role in the global economic meltdown,” DiNapoli said in a statement. “Taxpayers bailed them out, and now they’re back making money while many New York families are still struggling to make ends meet.”
Wall Street firms received billions in government bailout funds in 2009 as the financial crisis crippled the industry and the economy sank into one of the worst recessions on record.
The report notes that most of the big financial firms have said that their top executives will receive stock options and other forms of deferred compensation for 2009 in lieu of cash bonuses. DiNapoli also pointed out that Wall Street lost over 30,000 jobs last year, though the industry added about 3,900 jobs in the final three months of 2009.
The estimates, based on tax collections reflecting cash bonuses and deferred compensation for which taxes have been prepaid, do not include bonuses paid by Wall Street firms to their employees outside of New York City. The figures do not include stock options that have not yet been realized or other forms of deferred compensation.
The report also said that the estimated bonus pool for 2010 is a third less than the amount paid two years ago, which was the previous most profitable year. DiNapoli noted that estimating the size of the bonus pool was made more difficult this year by unprecedented changes in compensation practices.
“We do have to acknowledge that there have been some changes in compensation,” the Comptroller said. “Not all of it is cash and up front.”
The rebound in bonus payments could be a boon for New York state, which is struggling to close a massive budget deficit.
On Tuesday, DiNapoli said lower tax collections, among other things, could cause New York’s budget deficit to balloon to more than $2 billion this year.
“There’s some good news from a revenue perspective for New York State’s tax revenues,” DiNapoli said. “But the other message is that Main Street has not benefited from this.”
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